Transcontinental Inc Q1 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Hamir Patel - CIBC Capital Markets - Analyst : Hi, good afternoon, Thomas, the 2% organic decline in in packaging in Q1, how much of that was price versus volume? And how do you see volumes trending over the balance of the year? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MARCH 11, 2025 / 8:30PM, TCLa.TO - Q1 2025 Transcontinental Inc Earnings Call

Question: Hamir Patel - CIBC Capital Markets - Analyst : Okay, great, thanks. That's helpful. And just on the non-core assets side, I believe you mentioned that there were two buildings that you're targeting to sell this fiscal year. Could you just remind us what sort of the remaining or expected proceeds would be from those two?

Question: Hamir Patel - CIBC Capital Markets - Analyst : Okay, great. That's all I have for now. I'll turn it over. Thanks.

Question: Adam Shine - National Bank Financial - Analyst : Thanks a lot. Good afternoon. Thomas, maybe just with respect to flyers, obviously, concerns out there that we could see a recession brewing. We'll see how that whole tariff dynamic ultimately plays out. Usually, flyers can resonate well in that type of environment. Are you seeing any changes in the behavior of any of your customers quite yet? Do you expect anything? How's the Q2 evolving so far with flyers?

Question: Adam Shine - National Bank Financial - Analyst : Okay. Anything to note on the evolving transition to radar just in terms of any additional distribution opportunities and perhaps just acknowledging that some of the pressure over the past year at the top line has been exacerbated as you move through that transition from (inaudible) to radar. Are we getting closer to a lapping of that top line pressure, or do you see that for another, maybe quarter or two?

Question: Adam Shine - National Bank Financial - Analyst : Exactly. And just maybe one more thing just on the packaging side. I know you talked about some better results expected in the second half of the year, but I think, in the last quarter as you closed down fiscal 2024, there was a suggestion that the market in medical was perhaps stabilizing a little bit. So was there something that happened in Q1 to sort of reverse course a little bit there? Or was the comment maybe just a bit optimistic, perhaps premature back in December?

Question: Adam Shine - National Bank Financial - Analyst : Perfect, thank you for that. I appreciate it.

Question: Sean Steuart - TD Cowen - Analyst : Thank you. Good afternoon, everyone. I wanted to come back to tariffs. I would guess it's quite small, but the book exports that are exempt from tariffs. Can you give us a sense of the scale relative to the 10% of the combined company sales that are exposed potentially to tariffs? What that would constitute? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MARCH 11, 2025 / 8:30PM, TCLa.TO - Q1 2025 Transcontinental Inc Earnings Call

Question: Sean Steuart - TD Cowen - Analyst : Got it. Okay, thanks for that. And then just a question on the returns to shareholders and the thinking around the special dividend and the rationale for that choice versus faster buybacks. And your company is pretty consistently increased the regular dividend as well. How we should think about the special dividend versus ongoing increases to the regular dividend going forward?

Question: Sean Steuart - TD Cowen - Analyst : Understood. That's all I have for now. Thank you.

Question: Maher Yaghi - Scotiabank GBM - Analyst : Great, thank you for taking my question. I actually wanted to ask you a question on the tariffs from an opportunity perspective rather than what you could lose. Because I think some of your peers transport a lot more than you across the border. Is there an opportunity to either win market share in either side of the border, given your capabilities, your capacity to produce, both on the printing and the packaging?

Question: Maher Yaghi - Scotiabank GBM - Analyst : I guess that brings us back to the process of tariffs and impact on that 10% you mentioned. How quickly clients can turn around and find another local supplier for the products that are in question here? If let's say tariffs are implemented in the beginning of April, how quickly do you think that 10% can be affected?

Question: Maher Yaghi - Scotiabank GBM - Analyst : So the 10% is -- I just want to make sure I get this. The 10% is the final sales that you make that are affected potentially by cross-border tariffs, right?

Question: Maher Yaghi - Scotiabank GBM - Analyst : It's not the input cost. It's not 10% of the input cost. It's 10% of top line.

Question: Maher Yaghi - Scotiabank GBM - Analyst : Yeah. No, I mean, I think every day you wake up with a different answer. So maybe one last question, and that's related to the special dividend. In the context of a possible recession either both in the US or in Canada and a weakening dollar, et cetera, even with that, you still felt your balance sheet is strong enough to support a special dividend. Can you maybe talk a little bit about that view that you have that got you to decide to pay the dividend now instead of waiting a couple of months just to see what tariffs could mean to the economy? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MARCH 11, 2025 / 8:30PM, TCLa.TO - Q1 2025 Transcontinental Inc Earnings Call

Question: Maher Yaghi - Scotiabank GBM - Analyst : I see. Maybe, sorry, one last question on M&A because there's voices out there saying that if we do have, and if Canada has to face certain tariffs, there could be an increase in potential M&A within Canada, within Canadian firms. What's your view on that? Is there a potential for increased opportunity to transact in the coming months, given also your strength and your balance sheet?

Question: Maher Yaghi - Scotiabank GBM - Analyst : Okay. Thank you very much.

Question: Stephen MacLeod - BMO Capital Markets - Analyst : Great, thank you. Good evening, everyone. I just wanted to follow up on a couple of things. One was just with respect to just the cost savings and the initiatives that you have. You've implemented and we're obviously seeing the benefits. Could you just give us some understanding or some update as to where you stand in terms of recognizing the full percentage of the expected savings that you had laid out?

Question: Maher Yaghi - Scotiabank GBM - Analyst : Great. Okay. That's good. Thank you.

Question: Maher Yaghi - Scotiabank GBM - Analyst : Yeah. Okay. Okay, great.

Question: Stephen MacLeod - BMO Capital Markets - Analyst : Okay, that's great. Thanks for the caller, guys. Appreciate it. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MARCH 11, 2025 / 8:30PM, TCLa.TO - Q1 2025 Transcontinental Inc Earnings Call

Question: Drew McReynolds - RBC Capital Markets - Analyst : Yeah, thanks very much. Good afternoon. A couple of clarifications for me. First, on the strike impact, Donald. You referred to -- I may have missed a 3 million of strike impacts not being EBITDA. Is that the right interpretation? I can't recall what you said.

Question: Drew McReynolds - RBC Capital Markets - Analyst : Okay, yeah, that's perfect. And another point of clarification just back to tariffs, you did mention last quarter 10%. A total revenue was cross border sales. The language today, did I hear you correct, that's 10% in packaging and 10% in printing is roughly that exposure?

Question: Drew McReynolds - RBC Capital Markets - Analyst : Yeah, okay. Okay, so 10% combined is the exposure. And then within retail services and printing, you said a portion was below 40%. Obviously, the book printing is the majority. What was the below 40%?

Question: Drew McReynolds - RBC Capital Markets - Analyst : Okay, yeah, thanks for that clarification. And then maybe a last one here on maybe to you, Thomas, on the and market demand within packaging coming out of the last quarter. You obviously alluded to the volume and pricing put and take. And it just seems like out of the gate here as it pertains to Latam and medical. It just took a little bit longer to kind of get back to where you need to get back to. Is there anything else that's kind of changed from your commentary last quarter? Or do you still see that kind of end market demand improving? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MARCH 11, 2025 / 8:30PM, TCLa.TO - Q1 2025 Transcontinental Inc Earnings Call

Question: Drew McReynolds - RBC Capital Markets - Analyst : Got it. Okay, that's great. Thanks a lot.

Question: Martin Kim - Cormak Securities - Analyst : Well, thank you for taking the question. I just have a short one. Is there any long term target leverage ratio you're looking at?

Question: Martin Kim - Cormak Securities - Analyst : Yeah.

Question: Martin Kim - Cormak Securities - Analyst : I see. Thank you so much.